IEC holder cannot escape liability by claiming they only lent license to actual importer under Section 28(1)

CESTAT New Delhi dismissed appeals by two parties regarding differential duty recovery under Section 28(1) of Customs Act for undeclared/misdeclared imports. First appellant claimed he only lent his IEC to the second party and had no involvement in imports, but CESTAT found no evidence supporting this claim given his firm's bank account, lawyer representations, and CHA filings. Second appellant's appeal was dismissed for non-prosecution after 36 adjournments over five years. CESTAT upheld penalties under Section 112(a) as the second party had introduced himself as sales in-charge with authorization and provided detailed business information, contradicting claims of being merely a freight forwarder.

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Issues Involved:
1. Misdeclaration of goods and non-compliance with customs regulations.
2. Availment of customs exemption without fulfilling conditions.
3. Imposition of penalties on Umesh Kumar and Rajat Arora.

Summary:

Issue 1: Misdeclaration of Goods and Non-Compliance with Customs Regulations

On 18.9.2014, a Bill of Entry No. 6807339 was filed with M/s. Aromatech as the importer. On examination, the goods were found to be in excess of the declaration in the Bill of Entry and there were also goods which were not declared at all in the Bill of Entry. Certain essential details such as the details of the importer, the exporter and the maximum retail price [MRP] were also missing on the cartons.

The goods were seized u/s 110 of the Customs Act, 1962 and the matter was investigated. Summons were issued to Umesh Kumar, proprietor of M/s. Aromatech, and in response, Rajat Arora appeared with an authorization from Umesh Kumar and introduced himself as the sales in charge of M/s Aromatech. He gave a statement admitting that the imported goods were in excess of the quantity declared and the Retail Sale Price as required was not affixed on them. He agreed to pay the Customs duty.

Issue 2: Availment of Customs Exemption Without Fulfilling Conditions

Further investigation also showed that 15 Bills of Entry had been filed prior to this Bill of Entry by M/s. Aromatech and in all these cases, the appellant had availed the benefit of Customs exemption notification no. 12/2012 dated 17.3.2012 without following the conditions of the notification. The importer declared the State as UP and provided its VAT registration number. However, from the VAT returns filed with the UP Government authorities, it was evident that the importer had not paid any VAT at all. Thus, the importer had evaded paying SAD declaring that the goods will be sold in UP but did not pay VAT in UP.

Issue 3: Imposition of Penalties on Umesh Kumar and Rajat Arora

By the order-in-original dated 25.2.2016 [OIO], the Commissioner confirmed the proposals in the SCN. This order was assailed by M/s Aromatech before this Tribunal in Customs Appeal no. 51647 of 2016. By Final Order dated 9.5.2017, this tribunal remanded the matter to the original authority. Following the directions of this Tribunal, the Commissioner passed Order in Original (denovo) dated 4.1.2018 [De novo OIO] which is now assailed in this Customs Appeal No. 51578 of 2018.

The OIO dated 25.2.2016 was also assailed by Rajat Arora in Customs Appeal no. 51595 of 2016, but his appeal was dismissed for non-prosecution by Final Order dated 25.1.2017. Thereafter, on an application from Rajat Arora, the appeal was restored on 24.4.2018.

Findings and Decision:

Umesh Kumar's appeal was dismissed as the Tribunal found no evidence to support his claims that he was not involved in the imports and that Rajat Arora was the actual importer. The Tribunal noted inconsistencies in Umesh Kumar's arguments and his involvement in the Writ Petition filed for provisional release of seized goods.

Rajat Arora's appeal was also dismissed. The Tribunal found that Rajat Arora had introduced himself as the sales incharge of M/s. Aromatech and was intricately involved in the business. The penalty u/s 112(a) of the Customs Act, 1962 was upheld as the Tribunal found no reason to interfere with the penalty imposed on Rajat Arora.

Both appeals were rejected, and the impugned orders dated 24.2.2016 and 4.1.2018 were upheld.

[Order pronounced on 08.04.2024]

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